Estate-Planning Documents You Need Right Now

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Do you want to be remembered fondly by your loved ones? Then tackle the estate-planning tasks you’ve been meaning to get to. Your heirs will bless you for not leaving a mess for them to clean up.

Many of us want to get going but don’t know where to start. In the video below, Money Talks News founder Stacy Johnson explains what you’ll need. After that, keep reading for more about eight documents that can help you get your affairs in order.

If that sounds like a lot of paperwork, don’t worry: You probably won’t need every one of them.

1. Last will and testament

Making a will gives you the power to decide what will happen to your children, pets and possessions of financial and sentimental value after you’re gone. You can include any funeral provisions you’ve made and your instructions.

With no will, your assets will be dispersed by a probate court. Probate proceedings are public record.

If you’re married, each spouse should have a separate will, AARP says.

Update your will as big changes occur — marriage, divorce, inheritance, purchase of real estate or the birth of a child, for instance. If you have changed states, have your will reviewed by an attorney in the new state, advises lawyer Deborah Jacobs on Forbes.

You can add to or change a will in either of two ways: make a new one or add a codicil, a supplement. Nolo argues that codicils are outdated and even potentially confusing. It’s just as easy to make a new will, since both require witnesses.

Get an attorney’s help if you have substantial assets or a legally complex personal or financial situation. CNBC lists a few other situations when an attorney’s help is advisable.

Use your will to name guardians for those under your care, including children and pets. Designate any assets you are leaving for their care.

Caution: Keep private information — passwords, for example — out of your will as it could become a public document.

2. Revocable living trust

A living trust is another tool for passing assets to heirs while avoiding (potentially expensive and time-consuming) probate. It’s “revocable” because you can change it as long as you’re mentally competent.

You name a trustee – perhaps a spouse, family member or attorney — to manage your property. Unlike a will, a trust can be used to distribute your property now, or after your death. If you have substantial property or wealth, a trust can be used to provide tax savings.

ElderLawAnswers explains differences between trusts and wills. Creating a trust is not a do-it-yourself project. Get an attorney’s help.

3. Beneficiary designations

When you purchase life insurance or open a retirement plan or bank account, you’re asked to name a beneficiary who’ll inherit the proceeds. These designations are powerful; they take precedence over instructions in a will.

Keep beneficiary designation papers with your estate-planning documents. Review and update them as your life changes and you want to name new beneficiaries.

4. Durable power of attorney

Choose someone to act on your behalf, financially and legally, in case you can’t make decisions. Don’t put off this chore. You must be legally competent to assign power of attorney. Older people, worried about relinquishing control, sometimes put off the task until they are no longer legally competent to do it. Formsmax has free power of attorney forms used in each state.

If you have not designated someone as your power of attorney, your family’s hands are tied if you become incapacitated — something that can happen to young people as well as the elderly.

“For most people, the durable power of attorney is the most important estate-planning instrument available — even more useful than a will,” says an ElderLawAnswers article explaining power of attorney in detail.

Some financial institutions won’t accept a general power of attorney document, so ask your banking and financial institutions if they have a separate power of attorney form you must use.

ElderLawAnswers adds:

… if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian.

5. Health care power of attorney and living will

With a health care power of attorney (also called durable health care power of attorney), you name someone to make medical decisions for you if you’re incapacitated. This is different from the durable power of attorney for financial and legal affairs.

A living will lets you say what types of care you do and do not want, in case you can’t communicate. “You can use your living will to say as much or as little as you wish about the kind of health care you want to receive,” says legal site Nolo, in a detailed article.

In some states the living will and health care power of attorney forms are combined in one “advance directive” form.

These decisions require discussion and weighing of values and wishes. The American Bar Association has a free toolkit of 10 tools to help with making plans and decisions.

States differ in their requirements. To obtain a form and instructions that are valid in your state, ask at a local hospital. Here are more resources from the American Bar Association, including a sample form. The National Caregivers Library explains more.

6. Provision for digital assets

Decide what to do with your digital information, including your computer hard drive, digital photo collection, information stored in the cloud, and online accounts, like Facebook, Yahoo, Google and Twitter. Be sure to include a list of your passwords. “What Happens to Your Data When You Die” tells how to make these decisions.

7. Letter of intent

For instructions, requests and important personal or financial information that don’t belong in your will, write a letter. Use it to convey your wishes for things you hope but don’t require to be done — for example, detailed instructions about how you want your funeral or memorial service performed.

No attorney is needed. The letter won’t carry the legal weight of a will.

8. List of important documents

Make certain your family knows where to find everything you’ve prepared. Make a list of documents, including where each is stored. Include papers for life insurance policies, annuities, pension or retirement accounts, bank accounts, family records, divorce records, birth and adoption certificates, real estate deeds, stocks, bonds and mutual funds.

Another item helpful for your heirs is a list of bills and accounts, including contact information and account numbers for each, so your representative can close and settle these accounts.

AARP suggests using a safe at your home or business for storage. Your lawyer’s office may be another possibility. It adds:

Before you decide to store the will in a bank safe deposit box, consider state and local probate law. Many laws require that a bank safe deposit box be automatically sealed upon your death. This can result in messy complications.

Here are other resources to help with estate planning:

Do you have an experience or advice to share about preparing your estate? Post a comment below or at the Money Talks News Facebook page.

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Comments & discussion

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  • Kolleen Dohermann

    I bought a kit from Suze Orman, It has all of this stuff in there and does not require an attorney assuming you don’t have complicated holdings, etc. I sat down with my Mom and did everything in one day. My Mom passed away three months later and as executor everything went smooth. I do caution everyone out there that if you have a revocable trust (I do) you have to change the title of all accounts you want included in the trust. For instance, your house title, bank accounts, etc. have to be retitled. If not, they aren’t part of the trust. Doh! My Mom actually had paid an attorney to draw up the trust but never funded it. So you still have a bit of work but PLEASE care enough about your family to do the work. If you focus you’ll have it all wrapped up in one week. This is no time to procrastinate!

  • Jake

    When all is said and done, other than religious aspects which come from a church, marriage in the eyes of the government is simply a legal contract. I wonder if the same sort of arrangement (power of attorney, healthcare power of attorney, inheritance, etc.) could be made with contracts such that the various contracts performed the same thing as the marriage contract.